Thursday 29th August – ES_F Review

Morning Traders,

Some serious moves overnight, I had expected us to be testing the 2900 zone today or tomorrow and woke up this morning to see the melt-up in the ES Futures overnight.

Yesterday was an interesting day, where we sold-off from the cash open and tried to push down, but bears couldn’t fight it and we got swift rejection when it traded back through the open and drove upwards to close in the 2890 range. It was a really choppy day to trade, and to be honest, the best trade of the day was the re-test of the open during the ‘A’ period on the profile. Personally I find this hard to do, as I have some strict rules around trading during the initial 30 mins after the cash open. But if you’d bought it and ran it, you’d have done well!

Overnight, any market makers or wholesale traders are offside, significantly. So I expect the opening trade to be difficult to read. Initial overnight trade was net-short but we’ve had a melt up and earlier this morning, we were looking at a 30 handle gap up. Currently at time of writing this, we’re c.25 handles up from last night’s close, so we’ll look at gap rules as we’re fully out of yesterday’s range. There may be an attempt to close the gap, but if it fails, the rules tell us to ‘go with’ the gap – i.e. long in this case. I won’t do anything until I see the opening trade unfold.

On the chart above, I have 2 zones market as being important. The purple zone is important as it’s between the T+2 settlement high of Tuesday’s trade (2899.50) and a key level @ 2911.50. Acceptance in that zone in the context of month end tomorrow, will be important. The green zone is the remainder of the gap down to yesterdays RTH high @ 2890.50 – I would look for responsive buying in that zone if we’re to carry 2900’s into the holiday weekend.

To the upside, 2925 is a key resistance level if we break the overnight high @ 2919.75 – be wary of orderflow at the overnight high, as it could be an opportunity for wholesale to trap weak longs by stacking the bids before pulling and selling short. Any break & hold above 2940 is bullish to the upside.

Keep an eye on the internals to give you a read of the mood out there. If ticks don’t turn negative, this should hold the gap.

Stay safe!